Canada’s merchandise exports rose 4.1% to $68.4 billion in May, the latest data from Statistics Canada shows. This was the fifth consecutive monthly increase and the tenth gain over the past twelve months.
Imports decreased 0.7% to $63.1 billion, down for the first time in four months. Imports from China in particular fell sharply, reflecting the fallout from COVID-19 lockdowns in key manufacturing hubs.
“Canada’s exports and trade surplus continue to be buoyed by higher prices, especially for commodities. Unfortunately, the country’s export performance has been much less impressive when viewed in real terms. Since the beginning of 2022, the value of exports has risen by more than 20%, but export volumes are down 2.3%,” commented Alan Alan Arcand, Chief Economist, Canadian Manufacturers & Exporters.
As a result of the increase in exports and the decrease in imports, Canada’s merchandise trade surplus widened sharply from $2.2 billion in April to $5.3 billion in May, the largest trade surplus since August 2008.
“Breaking these data down, our trade surplus with the U.S. widened from $12.9 billion in April to another all-time high of $14.0 billion in May. At the same time, following the record $10.7 billion deficit recorded in April, our trade deficit with the rest of the world narrowed to $8.6 billion in May,” Arcand commented.
The increase in nominal exports was widespread, spanning 8 of 11 product categories. Exports of aircraft and other transportation equipment and parts surged 34.2% to $2.1 billion. Exports of aircraft saw an especially big jump, thanks mainly to higher exports of business jets to the U.S.
On the downside, exports of motor vehicles and parts fell 3.8% to $6.7 billion in May, the first decline in four months. This could be a worrying sign of renewed supply chain issues.
Exports to the U.S. climbed 2.4% to $52.9 billion in May, up for the fifth month in a row. At the same time, exports to the rest of the world jumped 10.6% to a record high of $15.5 billion. Among Canada’s major non-U.S. trading partners, exports to the U.K., the EU, Japan, and South Korea were up, while exports to Mexico and China were down. The increase in exports to the U.K. was driven by higher exports of crude oil and gold.